S&P 500: How are AI and energy repricing lifting tech sentiment? – Deutsche Bank

Equities recovered as US trading gathered pace, pushing the S&P 500 higher after an early global sell-off driven by AI concerns, rising oil prices and worries over French sovereign debt, Deutsche Bank’s Jim Reid notes. Strong SpaceX results and expectations ahead of Meta’s earnings helped improve sentiment towards technology stocks. Although tech-heavy indices continued to lag, they recouped a substantial portion of their intraday losses.

How did US trading turn around the early equity sell-off?

"It’s been another 24 hours of uncertainty and volatility, and that’s not me talking about our household during a wet half term. In markets, what started as a widespread morning sell-off dominated by AI concerns, higher oil prices and ongoing worries over French sovereign debt turned into a more positive session as the US came in, ultimately driving the S&P 500 to close +0.28% higher as the index saw the most daily advancers since April."

"The relief from energy that played out late in the European session meant equities rallied as investors overcame some of their earlier AI jitters. Tech-heavy indices such as the Philadelphia Semiconductor Index (-0.29%) and Nasdaq (-0.02%) still underperformed, but this was a big improvement after chip stocks had been nearly -2.5% down early on."

"Outside tech, stocks performed much better, with 403 daily advancers in the S&P 500, the most since April, while the equal-weighted version of the index rose by +1.15%."

"Today we see the first of the hyperscalers report, with Meta out after the bell. This comes as SpaceX shares surged by about +8% in after-hours trading yesterday (vs NASDAQ Futures -0.16%), as the company exceeded quarterly revenue and net income expectations amid stronger AI revenue growth."

"Those results have boosted the tech mood overnight, with Nasdaq futures up +0.75% overnight, with those on the S&P +0.30% higher."

(An editor reviewed this article, which was produced with assistance from an Artificial Intelligence tool. Learn more.)